The Russian tobacco industry continued to shrink in retail volume terms in 2018, while value sales in current terms increased, primarily due to a further rise in taxation.
The best performing category in percentage value growth terms in 2018 was once again heated tobacco products, with these having been introduced in Russia in 2014 by Philip Morris, which launched its Iqos tobacco heating device and HEETS heated tobacco sticks. The category then witnessed the entry of British American Tobacco in 2017 with its Glo and Neo Sticks brands.
The competitive landscape in cigarettes remained concentrated in 2018, with the vast majority of volume sales in the hands of four multinationals, namely JTI Russia, Philip Morris International, British American Tobacco and Imperial Tobacco Sales & Marketing. The leader, JTI Russia, further strengthened its position in 2018 following the acquisition of Donskoy Tabak.
Although modern grocery outlets are growing in number in Russia and subsequently increasing their share of cigarette sales, particularly supermarkets, traditional independent small grocers remained the leading channel in 2018, while tobacco specialists continued to lead cigars and cigarillos and smoking tobacco. One of the most noticeable trends in terms of distribution has been the growing popularity of food/drink specialists, with this being spearheaded by the Krasnoe i Beloe retail chain.
Increasing excise taxes and a strong regulatory framework aimed at reducing smoking will continue to negatively impact the Russian tobacco market over the forecast period. This will particularly affect cigarettes, along with rising illicit trade and a further decline in smoking prevalence, with cigars and cigarillos and smoking tobacco also set to continue to struggle.
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Russia with research from Euromonitor's team of in-country analysts.
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This industry report originates from Passport, our Tobacco market research database.